A blockchain is essentially a distributed database of records or public ledger of all transactions or digital events that have been executed and shared among participating parties. Each transaction in the public ledger is verified by consensus of a majority of the participants in the system. And, once entered, information can never be erased. The blockchain contains a certain and verifiable record of every single transaction ever made.
Bitcoin, the decentralized peertopeer digital currency, is the most popular example that uses blockchain technology. The digital currency bitcoin itself is highly controversial but the underlying blockchain technology has worked flawlessly and found wide range of applications in both financial and nonfinancial world.
Think of “blockchain technology” as a collection of technologies, a bit like a bag of Lego. From the bag, you can take out different bricks and put them together in different ways to create different results.
Blockchain technology and some compelling specific applications in both financial and nonfinancial sector. We then look at the challenges ahead and business opportunities in this fundamental technology that is all set to revolutionize our digital world.
Say there is a coin that is currently worth thousands of US dollars but that is not made of Gold or Platinum or any precious metal. In fact, it’s not the kind of coin you can hold in your hand or stuck it in a piggy bank, it’s a digital currency that means it only exist electronically. It doesn't work like most money. It isn't attached to a state or government so it doesn't have a central issuing authority or a regulatory body. There is no particular organization or institution deciding when to make more Bitcoins figuring out how many to produce keeping track of where they are or investigating fraud.
In simple words, Bitcoins are like the rewards for a correct answer to a math problem. Where the problem and the answer are entirely unique. There will be a limit of about 21 million of these special solution rewards known as the “Bitcoin. Bitcoin is represented as BTC or 1 BTC is 1 Bitcoin. The best part is that we can deal with 0.1 BTC, 0.01 BTC as we would with say U.S. dollars. $0.01 USD is also known as 1 cent. Similar for Bitcoins though, it has software behind it that allows for a very small denomination of a Bitcoin that looks a tad scary: 0.00000001 BTC. Or 100 millionth of a Bitcoin.
So how does Bitcoin work as a currency? Well, Bitcoin wouldn't exist without a large network of people and a Programming language called Cryptography. Bitcoin is a fully digital currency and you can exchange bitcoins between computers and a worldwide peer-to-peer network. The whole point of most peer-to-peer network is sharing stuff like copies of super legal music or movies to download. If bitcoin is a digital currency what’s stopping you from making you a bunch of counter fit copies and becoming fabulously wealthy? That is because unlike an mp3 or a video file a bitcoin isn't a string of data that can be duplicated.
A bitcoin is actually entry on a huge global ledger
called the block chain. Block chain records every bitcoin transaction that has
ever happened till this moment. The complete ledger is about 200 GB of
data. So when you send someone some
bitcoins, it’s not like you are sending them a bunch of files. You are
basically writing the transaction down on that big ledger. This ledger is not
centralized to any bank and it is completely decentralized. Anybody can
volunteer to keep the blockchain up to date with all the new transactions that
happened and a lot of people do. It all works because there are lots of people
keeping a track of the same thing, to make sure all transactions are accurate.
Money Management also known as Investment management or Portfolio Management can be defined as a process in which investors budget, save and invest their capital usage. It is a protective concept that keeps your funds secure so you can trade another day and underpins profitable performance. It is the art of managing capital by applying strong capital risk management. Money Management is the second most important part in trading right after trading psychology. But a lot of novice traders often wouldn’t pay much attention to it and neglect it by only focusing on gains and technical analysis. But in the world of trading financial markets it is after all very important to know how to manage your capital. Money Management is a vital element of trading the most volatile financial markets like Forex and Cryptos. On a basic level it tells you that if you have enough new capital to trade additional positions. Money Management is an important factor that differentiates success and failure especially when using leverage.
It is basically defined as a scientific study of the human brain and the way it functions. This is with respect to those functions of the mind, which affects the behavior of a person in any given context. It can also be defined as the metal characteristics like attitude of a person towards something, the way they think etc. Psychology won’t just give us an understanding of how a person thinks consciously. It is also a study of unconscious or subconscious phenomenon. Hence, it is an overall study of the mind, which is not just limited to basic thinking and beliefs of a person but also the beliefs and deep-rooted perceptions.
Importance of Psychology in trading
Trading is one of those fields where Psychology plays a very important role. We can say that the basic Psychology of the trader can decide his/her fate in this field. Psychology in trading refers to the way a trader perceives on what is happening in the financial markets and how these perceptions can be influenced by their attitude and emotions. There is a general perception that majority of the traders goes through same set of emotions while they trade but that is definitely not true. If that is the case there won’t be a staggering difference between the traders who are making a lot of money and who are losing a lot of money. A lot of traders believe that a reliable and tested trading system alone can lead them to success in financial markets. They spend almost all of their efforts, time and energy around figuring out these reliable, standard and proven techniques. So they hardly pay attention to their discretion ability and their emotional awareness. These are the important factors that decide ones success in the market. Therefore, paying zero attention to overcome psychological barriers like emotional extremes and fear of failure will only lead them to failure. Almost always these emotional extremes are the factors that obstruct traders in properly analyzing the market.
The number of individuals failing in this industry is huge. People who force themselves in the world of Forex trading or Crypto trading eventually fail. This is because of their unrealistic expectations. They tend to believe that trading in the Crypto and Forex market for very few months will enable them to leave their full-time jobs. They expect for their money they invested to grow from $1000 to $100,000 in a matter of months. These unreal expectations construct a completely incorrect mindset, which results in running behind the thirst to make profits. As this thirst builds up, a trader unavoidably becomes controlled entirely by their emotions, which is a sure shot way to go broke. It is this exact combination of wrongly defined trading objectives and the unrealistic expectations, which results in the utter failure of their trading career.
The wave of the revolution created by Blockchains and smart contracts have been enormous and innumerable. Already, Blockchain applications are increasingly being leveraged to cure the challenges related to financial contracts, e-commerce, logistics, banking transactions, supply chain systems, legal contracts, and among others.
In the past, reliance on classical contracts often led to massive inefficiencies, delays in transactions, and exposure to fraudulent actions. Ever since Ethereum was unveiled by Vitalik Buterin as a global, public, Blockchain for executing smart contracts, many organisations that have deployed it have minimised the inefficiencies that were being witnessed earlier.
Ethereum was unveiled as a revolutionary platform for executing smart contracts and DApps (Decentralised Applications). At the time, Bitcoin—the first P2P and decentralised cryptocurrency based on Blockchain— could not solve the major problems that companies were facing emanating from contractual obligations because it was only used as a medium of exchange.
In a sense, Blockchain has help organisations reduce risks and promote efficiency in their operations across so many sectors. However, these benefits can only be achieved if a critical pool of developers—who understand how to develop smart contracts and Decentralised Apps (DApps)—exist to allow organisations to tap into this breakthrough technology.
This tutorial serves as a guideline for engineering Ethereum smart contracts. To fast-track the learning process, the tutorial will be split into 5 milestones:
1. Understanding the Blockchain basics
2. Create the first smart contract in Ethereum;
3. Testing the smart contracts;
4. Creating the user interface for the smart contract using ReactJS; and
5. Deploying smart contracts
HyperLedger is a Blockchain platform that was launched by the Linux Foundation and backed by IBM. It is essentially an open-source project that you can use to develop permissioned (private) Blockchain-based business networks. In such a network, the entities and roles of each participant are clearly known in advance.
Unlike public Blockchains such as Ethereum where any node can participate in the network, HyperLedger Fabric is a permissioned Blockchain where the authority has near-complete control of how users participate in the network. For any node to participate in the network, such a user has to be granted certification from the organization.
In Ethereum, node identity is managed by public and private keys which are randomly generated via a seed phrase. In HyperLedger Fabric, node identity is established via certificates which use private and public keys. To establish consensus, HyperLedger Fabric relies on trusted nodes who are designated via proof of authority. This requires a Membership Service Provider that grants certificates to nodes and no transaction fees are needed for validation of transactions.
In public Blockchains such as Ethereum, the consensus is achieved via the proof-of-stake algorithm where any node can undertake the task. In such a process, users have to pay some fees for any transaction to be appended to the Blockchain.